qbteachmt
Level 15

"Since they paid contractors to develop the land into 6 individual lots, does that mean they cannot get capital gains treatment?"

"I am trying to understand if developing the land causes these sales to be from a trade or business and subject to self employment taxes."

I think the miscommunication comes from using the word "develop." What does "develop" mean in this case?

Was this an entire farm property, no longer being farmed? Inherited farm, some small section carved out of it? A parcel of land which includes their own house, bought a few years ago and now having the excess land carved into 6 individually titled lots and paying someone to do some grading and making some approaches? Putting in sewer and water and power? Putting up homes?

 

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